Tuesday, January 22, 2008

Economists beat the market 

Interestingly, the American Economics Association last year decided to ask a committee of its own membership to make recommendations about how to allocate the Association's own portfolio, worth $18 million. Changes were made last April; the results showed the association made 10.2% on its investments, beating the S&P 500's 5.5%. But they did this by changing the mix of investing from 65% stocks/35% bonds with small (10%) European and Pacific stock diversification to 85/15 with a 30% international stocks. So some of that gain comes at greater risk with equities, though with arguably more geographic diversification. I wonder how it's done in the choppy markets this month? (Source, Chronicle of Higher Ed, subscriber link.)